Question:
Describe about Compare and Contrast the Approaches of China and Uk in Respect to Their Funding System?
According to Gass and Bezold (2013) access of information, quality of service and financing costs of the services are the three essential components of the health care system. As per the norms of the WHO every individual should obtain health care services without any financial constraint. The report of the global health care services states that UK make the highest spending in the health and social care services. UK is seen to make the highest payment in the nursing sector by employing around 101 nurses per 10,000 people. In addition to this the per capita government spending of China is around 203 $. Khan and Willis (2009) stated that the funding in the healthcare system basically includes financing for health series, employment of service providers, access to essential medicines and technologies and sufficient training costs.
However on viewing of the health care systems of the two country UK and China a contrast was found in the delivery of the systems. 95% of the healthcare transactions in UK are delivered in primary care setting and on the contrary 90% of the health encounters takes place in hospitals in China. Hence compared to UK, China makes larger funding for the purpose of health care services Guanais and Macinko (2009).
The report here deals in comparing the funding services of both UK and China in respect of factors like raising through revenues, tax funding, allocation of financial resources, poor health risks, fiscal sustainability, exportability of health care systems and cultural norms and values (Gootnick, 2010).
Raising Enough Revenues
According to Mulley (2009) raising of sufficient revenues is essential in order to provide individuals with intended packages of health services. China which is a middle income country has a life expectancy of around 78 years. At present the public health care services of the country are delivered via central government managed public hospitals that are financed by general revenues. In the early years during Mao’s regime a state sponsored health care system was made to make the public health care system efficient. However Kapiriri et al. (2009) argued that the corruptions in the public financing system provoked the introduction of health challenges like SARS, mental illness, smoking pollution etc in China. However the health care sector continues to develop at an astonishing rate in the country with a projected spending of around $ 1 trillion by the end of 2020. Along with the Traditional Chinese Medicine (TCM) funding has been made in order to include western drugs from international suppliers (Morris et al. 2012).
Figure 1: Sources of finance in Healthcare system of China
(Source: Hsu, 2013, pp-656)
The country is also [planning to make 62% of the funding in the training activities of new doctors and is planning to train around 3, 00,000 physicians in next 5 years. The country is also planning to invest for introduction of the Universal health coverage by the end of 2020. The company is making around 30% of the funding for employing pharmacy companies from UK in order to provide enhanced healthcare services to the citizens (Porter, 2010). Tax based financing system has been considered to be efficient in enhancing of health care services because of the fairness in the system and high degree of political accountability however the same may not be useful in case of all countries like in case of China the system is not effective (Gaag, 2009).
The NHS (National Health Service) of United Kingdom helps the health care system to draw the maximum revenue. The main principle fundholders are the NHS primary Care trusts (PCTs) that are mainly commissioned by the GPs, NHS trusts and also private providers. The PCTs pay out funds on contract basis or on agreed tariffs, those guidelines the Department of Health (Light, 2003). The main advantages of using this system are that this system helps to provide political accountability and also helps to improve the health problems that also helps to improve the political stability associated with the system. Considering the macro level, the NHS framework is mainly settled by the government of Westminster. The NHS system has decided to transfer around £2billion by the year 2014to the local authority to reduce the real expenditure. This process would help the UK healthcare system to decrease needless admissions to the hospitals and also discharge of patients etc which would further reduce the pressure of NHS also (nuffieldtrust.org.uk, 2010).
However, similar to China’s healthcare funding system, the UK’s NHS has also received few negative outcomes in the recent years. For instance, the mortality rate that is open to the healthcare, then the mortality rate due to few respiratory diseases and also due to cancers or few measures that have been strokes amongst the most developed world. The main objectives of the tax-based National Health Service were that providing full coverage to every member during any kind of health care need. This is helping the health care services of UK to be comprehensive and thus the financial sustainability of the UK’s healthcare system is becoming more challenging. Recently, in the year 2013, a new system named Health and Social Care Act 2012 was established which helps to provide better services and the community care and acute services that are handled by the local clinical commissioning groups are led by the GPs (gov.uk, 2014).
The social health insurance (SHI) in China is undergoing massive reforms in the current situation. The Ministry of health and the Ministry of Labor and social security manages the social health insurance and medical insurance systems in China. Majorly two types of health insurance systems prevail within the country namely urban health insurance and rural health insurance. The SHI generally covers workers in formal sector and pools the health risks of the employees. To abolish the old insurance system the country introduced the Urban Employees Basic medical Insurance System in 1998. In comparison to the old insurance system the new system covered the participation of all employees of public and private companies (Meessen et al. 2011). However Wang et al. (2009) opined that the new insurance system had a flaw since it doesn’t cover the unemployed, retired and laid off workers within the population. Since the SHI doesn’t include the government healthcare institutions hence a new form of distribution of funds were arranged by China government. Under this plan the distribution of the funds to the government health care institutions were handled by the locality with inclusion of certain cost cutting measures like ceiling on expenditures, creation of co payment system and a formulary of permitted prescription drugs. In the year 2003 the state council issued the rural co operative Health care system to establish health insurance facilities for the rural population. Morris et al. (2012) added that funding in the rural sector has increased the life expectancy of the rural population from 40 to 69 years.
The Healthcare system of UK through taxation is very distinct. They have a mixed system that combines both the commercial incentives and the equity. Apart from increasing the health care budgets in the past, the European standards still remain shocking about the services and facilities of NHS. It seems that according to the spending levels of the neighbors of Northern European, there is a need of VAT rate of 27% which would then match up with the levels of spending of people (Boon et al., 2007). However, UK needs to take care of the mixed funding model. People resist increase in the tax as they fear that their money would be wasted due to the unresponsive politicized system. Thus, to remove this fear, there is a need of change in the structure of the system to fill this spending gap. The Social Health Care Insurance system delivers better service with high level of satisfaction. The healthcare system of UK is copayment system structured which is mainly responsible for encouraging the patients to be more responsible as health care users. This helps the UK health care systems to make the additional revenues which can be used for various other essential services. Further, the system of UK makes sure that the people are able to choose various funds which can offer the patients a comprehensive healthcare package (Schieber et al., 2006).
As per the reports of The Economist the western European countries like Germany and Sweden spend more on the health care compared to countries like China. China is seen to make around $ 5450 investment in the health care sector. Unlike the DRG based reimbursements in the European countries China lacks the same opportunities (Hu and Hibel, 2013). Most of the financial reforms have been designed in accordance to enhance the quality side of the health care services. However Asian countries like China have focused on funding of their health care system. The introductions of the insurance coverage expense in training of the professionals have helped China to not only control costs in healthcare but also increase the quality within the system. However as per the reports of WHO report 2000 China was ranked as 144th in the healthcare system ranking because of the lack of equality and lack of government funding. This inequality arises due to the increased range of contribution by the individuals towards the medical insurance schemes compared to the government. The employer’s contribution for the medical insurance is around 6% and the employee contribution is around 2% of their salary and the local governments are responsible for the management of the contributed funds (Chon, 2010).
The UK regions spend more on the per capita GDP of healthcare. According to the Economist Pocket world, the GDP percentages are also high due to the healthcare expenditures. The healthcare system of UK represents the largest expenditure of the world for the governments. The NHS system accounts for 8% of GDP of UK. Since the population of UK is getting older, there is a rise in the co-morbidities and thus requires endless resources to meet their needs. The NICE (National Institute for Health and Clinical utilizes the QALYs (Quality Adjusted Life Years) for measuring the outcomes of health and also cost-effectiveness. Through this the system tries to quantify the life length and also life quality (Ministryofethics.co.uk, 2015).
The resource allocation of UK is based on quality-outcome framework similar to China. This system is actually narrowing down the gap between the service need of the individuals and also the awareness about that demand and access to the kind of service and also increasing the gains due to the availability of service. Some of the common resource allocation mechanisms that the UK’s healthcare system follows are the payment system which is performance-tied, price controls and also PHC control system over the budgets of the hospital (Mossialos et al., 2002). Further, the hospitals in UK are mostly semi-autonomous which helps to solve the political issues. Thus it is important to produce various governance strategies in the tax-funded healthcare system. Further, the Government of UK also uses variety of non-financial and financial mechanism that helps to carry out many services like regulating, mandating, financing also providing various information. Another revenue sources for raising the attention is the efficiency gains. Further, users’ fees also generate health financing for UK healthcare system (Chang, et al., 2015).
According to Pan (2010) the insurance companies in both European and Asian countries are practicing the risk pool method in order to organize financing facilities which can provide protection to the individuals in time of natural disasters as well as other medical emergencies. The pools are made out of mandatory cross subsidies paid by all individuals who are privately insured. The risk pool strategies adopted by the health care units of China has helped the country in financially supporting the citizens at the time of natural disasters and diseases like SARS. The prearranged fund for the medical emergencies maintains the financial stability of the country and also provides support to the affected citizens. Risk pooling in European countries are mainly concerned with the promise of providing support to the individual affected person. However the social culture of China doesn’t permit the same hence the risk pooling strategies in China concerns the family and the overall society of the country.
Pooling is the healthcare framework capacity whereby gathered healthcare incomes are exchanged to obtaining associations. Pooling guarantees that the risk identified with financing healthcare intercessions is borne by all the parts of the pool and not by every donor independently. Its principle object is to impart the monetary risk connected with healthcare intercessions for which there is indeterminate need (Smith and Witter, 2001). The contentions for risk pooling in human services typify value and effectiveness contemplations. The value contentions reflect the view that society does not consider it to be reasonable that people ought to accept all the risk connected with their social insurance consumption needs. The effectiveness contentions emerge on the grounds that pooling can lead to significant upgrades in populace healthcare can expand profit, and decreases vulnerability related with human services use. Risk pooling is obliged due to the vast vulnerability in the greatness and timing of a singular’s human services use needs. It suggests three redistributive capacities: from the rich to poor people, from the beneficial to the wiped out, and from the profitable to the inefficient phase of the life cycle(Smith and Witter, 2004).
The intention of NHS (National Health Service) of UK is to provide equal opportunities to the healthcare users to have access to various services that are mainly needed for the clinical basis, further regardless of other individual characteristics. This helps the society to choose different financial contributions through financial means and also utilization of health care (Broek-Altenburg, 2014).
Fiscal sustainability is the ability of the government to sustain its current spending, tax and other policies in the long run without threatening the government insolvency (Shen et al. 2012).The financial sustainability of the country helps the country to reduce the structural tension within the financing system and in case of the finance sources for the health care systems. However China’s expenditures are more than the income of the country. In the year 2012 the Chinese government’s fiscal income grew by 12.8% however the fiscal expenditure grew by 15.1%. The employment rate of the country is also low and the poverty line is high. Hence the individual contributions of the working individuals towards the health reform policies are lower and hence the funding is also low. The fiscal sustainability policies in China should be improved in terms of public education, health care and environmental protection. The urban and the rural health policies don’t include insurance cover for the aged population of 66 years and above. However with the introduction of the one child policy the country is experiencing an economic slowdown and the government has to arrange for the health care funding of the rapidly aging population. Yang et al. (2010) has opined that if the rate of growth of health care spending continues to exceed the rate of growth of income in health care of China then it will affect the fiscal sustainability of the country. As per the reports of the fiscal sustainability around 70% of the age related expenditures in China is due to the health care and long term care costs.
The way nations are changing to manage their monetary supportability can be abridged by the words “singular obligation”, albeit there is perplexity about the idea of obligation. Clearly, there are contrasts between expense supported and Social Health Insurance (SHI) nations on this issue and nations likewise change by the way they manage their monetary maintainability. Kamiguchi and Tamai, 2011 depict a theoretical system for investigating the suitability of private financing in an openly supported health awareness framework and portray singular obligation joined with health awareness as “a heterogeneous gathering of items, which permits policymakers to settle on choices on apportioning by outline as opposed to default.
The NHS lives up to expectations as a team with business social insurance organizations and the scholarly world to create creative, coordinated, great and practical frameworks of consideration. Exceptionally, the UK’s business social insurance segment has inside and out experience of working in association with the NHS in arranging and conveying offices, clinical administrations and sending new innovations (Brown, 2003).
The dominant parts of NHS administrations are free at the purpose of utilization. This implies that individuals for the most part don’t pay anything for their specialist visits, nursing administrations, surgical systems or machines, consumables, for example, medicines and swathes, mortars, therapeutic tests, and examinations, x-beams, CT or MRI checks and so on. Clinic inpatient and outpatient administrations are free, both restorative and mental health administrations. Subsidizing for these administrations is given through general levy and not a particular expense (Jamison, 2006)
Since the NHS is not supported by contributory insurance scheme in the normal sense and the majority patients pay nothing for their treatment there is accordingly no charging to the treated individual nor to any guarantor or affliction fund as it is common in numerous different nations. This recoveries immensely on organization costs which may overall include complex consumable following and use methodology at the patient level and attending invoicing, compromise and terrible obligation handling.
A number of developed and developing countries are implementing strategies to export health services to make benefits in the health services. However in some case the local health care service system has suffered due to the extensive exporting of the health care services from other countries. In China the export of the Western Drugs has reduced the sales of the traditional Chinese drugs. However Pauly and Swanson (2013) argued that the development of the exportable health services has contributed to economic and human development in the exporting country. China exports medical devices like diagnostic imaging devices, medical supplies and dental products in order to increase the economic growth of the country in terms of the export. However to maintain a financial sustainability China has also imported western drugs and technologies to face the challenges in healthcare relating to high blood pressure problems, respiratory illness, cardio vascular illness and obesity problems. However the foreign companies have seen increasing market share in the past several years in the medical device market of China. In ultrasonic equipments, ECG, CT, testing equipments and physiological recorder the company recorded the highest amount of goring company control. In contrast to around 60% of the SMEs in China are responsible for production of medical equipments which are also exported to other countries. However Chernichovsky (2013) stated that the domestic industry is consolidating and continuously upgrading in order to compete equally with the mid level technologies and trying to take cost advantage over the foreign competitors. Moreover the China Government is set on building health care centers and upgrades the community in the rural, central and Western parts of China.
The main issue that brings in ubiquitous shift in the process of policy making, also shifting from the solidarity cultural value and social cohesion exhibits individuals’ responsibilities that prevails the driving forces behind the policy and economic reforms. In UK, individuals are mainly responsible towards the long history of health care sustainability. Since the health care system of every country is changing are changing rapidly, the key is “incrementalism”. Thus, the policy makers must negotiate in an intricate combination for improvement of economic, social and health improvements that help to mitigate or manage the health care services (Gutiérrez and Ferrara, n.d.). According to Haseltine (2013), the main success factors of UK healthcare system are the long-term political unity, recognizing ability and also setting up national priorities and also consistently desire towards social harmony and well- being. Due to diverse funding system, the policy makers need to look towards emulating the healthcare system at wider level.
The NHS services for the UK healthcare users are totally based on the “permanent residence status”. According to this system the citizens of Europe and also other countries of UK where the country have some specific arrangements can receive emergency treatment at free of cost. People who are working as missionary in any organization outside UK are fully exempted from the NHS charges and are generally offered services at free of cost. The rising and high cost of few medicines in IK for examples, medicines needed for cancer treatment are presenting heavy burden on PCTs which is creating issues in healthcare system funding of the system. Due to the impact of social, technological and economic transformation, it is import to maintain the financing system of UK healthcare (Petrou and Wolstenholme, 2000).
The difference in the cultural values of the Western and the Asian countries influences the formation of the health care reform in both the countries. In UK the social care reforms focus on providing benefits to the individual and on the contrary the health reforms of China focus on providing benefits to the family as a whole. According to Baltagi et al. (2012) China’s culture considers the individuals as a part of their family, friends and society hence the health insurance are structured accordingly to cover the individual as well as the family members. As a consequence the health care system of China is decentralized in comparison to that of UK. The decentralization of the health care system has bestowed the responsibility of the health care reforms on the local and district health clinics instead of putting the whole pressure on the central government. Yu et al. (2013) added that the idea of decentralization was to increase the citizen participation in the health services and improve access to health care and drugs in rural population. However the adoption of this process by the Chinese government has been faced by several problems like lack of financial control, decrease in the overall funding and services provided on the basis on income inequality. Hence these issues prevented the growth of the health care access in China. The major default that occurred in the heath care system of China due to adoption of decentralization was the reduction of medical funds to the rural areas. Moreover the privatization of the health care services in China further imposed price restrictions on the routine services for the individuals. The privatization led to rewarding of bonuses to the physicians who ensured profits to the hospitals. Thus the prevailing cultural system and the decentralization of the health system contributed to inequality in the health care services.
The period after devolution was trailed by enormous increments in subsidizing of the NHS over the UK. The NHS in England was obliged to utilize the expanded subsidizing to meet requesting focuses in the arrangement of yearly ‘star evaluations’, which connected from 2001 to 2005, and consequently in the yearly ‘Health Check’. The NHS is for the most part financed from the general tax system (95%) and different installments (5%) under a general plan which is situated by the Ministry and subject to endorsement by Parliament. Insurance based plans are connected with private sectors which developed quickly amid the 80’s and early 90’s (Public Health and Consumer Protection Series, 1998). In 1995 public hospitals got to be NHS hospital trusts which are currently more autonomous, particularly in utilizing their own medicinal staff and in giving administrations to a more extensive scope of suppliers. They find themselves able to obtain and discard property and arrive and create finances in new ways. Hospital trusts contract with the buyers an understanding at costs and the augmentation of gave health administrations. Before change, installment rates for clinical and non-clinical staff were dead set at the focal level.
The compensation framework for GPs is a complex mixture of expenses and stipends tagged in their contracts. The real installment is a capitation charge for every patient on the specialist s list. The level of installment relies on upon the age of the patient. A couple of administrations, for example, contraception and immunization are paid charge for-administration. There are likewise motivation installments for accomplishing, for instance, an vaccination target. For dentists, the overwhelming sort of installment is charge for-administration. For Pharmaceuticals there is a negative rundown of non-reimbursable medications. Costs are situated by the industry; however benefits are under control of the focal government. Contraceptives are for nothing out of pocket. The utilization of generics is emphatically advanced in the United Kingdom. The expenses of drug specialists are arranged by the focal government and the profession. Health care consumption in the United Kingdom as an offer of GDP, despite the fact that it has expanded, is low in correlation with other European nations, since it has been under tight focal budgetary control.
Conclusion
In conclusion, the report highlights the funding system of healthcare system in UK and China. Since, it is a vast area to be discussed the report identified the key areas that contributes to the funding system of healthcare. The report highlights that the healthcare system are generally funded by the government and also offered through government-mandates systems. This helps the healthcare system of UK and China to have access to various personal healthcare services. The report highlights that UK and China, both health care funding systems is based on quality framework. However, it is to be noted that there is some differences in the taxation system in healthcare systems of UK and China.
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